The IRA Investor Profile: Traditional IRA Investors’ Activity, 2007–2016

ICI Research Report, September 2018

88 Pages Posted: 11 Jan 2019

See all articles by Sarah Holden

Sarah Holden

Investment Company Institute

Steven Bass

Investment Company Institute

Date Written: September 18, 2018

Abstract

Using data from year-end 2007 through year-end 2016, this report analyzes data on traditional IRA investors drawn from The IRA Investor Database to gain insight into how traditional IRA investors fared during and after the financial crisis. After setting the scene in terms of financial developments and regulatory changes affecting traditional IRAs, chapter 1 analyzes the contribution, rollover, and withdrawal activity among 4.5 million consistent traditional IRA investors (those with accounts at the end of each year from 2007 through 2016). In addition, this chapter explores changes in asset allocation and account balances among consistent traditional IRA investors. The remaining chapters of the report primarily focus on a snapshot of traditional IRA investors at year-end 2016. Chapter 2 discusses how contribution activity varied by investor age in 2016, exploring which traditional IRA investors had contributions and how many of them contributed at the limit. Chapter 3 notes that the vast majority of new traditional IRAs opened in 2016 were opened with rollovers, and examines rollover activity by investor age. Chapter 4 explores withdrawal activity, which varies significantly with investor age and in reaction to rules governing withdrawals. Few traditional IRA investors younger than 60 take withdrawals; traditional IRA investors taking withdrawals tend to be older and often take out the required minimum distribution (RMD) amount. Chapter 5 reports variation in traditional IRA balances by investor age. Chapter 6 compares snapshots of the asset allocation of traditional IRA balances among cross sections of traditional IRA investors at year-end 2007 and year-end 2016. Because some of the variation in asset allocation appears to be related to traditional IRA balance size, the asset allocation of balances of $5,000 or less are compared with the asset allocation of balances of more than $5,000. Smaller balances often have high allocations to money market funds or other cash instruments, which in part may reflect default investment rules for certain rollovers.

Keywords: Retirement, IRAs, Asset Allocation, Investor Behavior

JEL Classification: D14, G11, J26

Suggested Citation

Holden, Sarah and Bass, Steven, The IRA Investor Profile: Traditional IRA Investors’ Activity, 2007–2016 (September 18, 2018). ICI Research Report, September 2018, Available at SSRN: https://ssrn.com/abstract=3313782 or http://dx.doi.org/10.2139/ssrn.3313782

Sarah Holden (Contact Author)

Investment Company Institute ( email )

1401 H Street, NW
Research Department
Washington, DC 20005
United States
(202) 326-5915 (Phone)

Steven Bass

Investment Company Institute ( email )

1401 H Street, NW
Washington, DC 20005
United States

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